It is important to the lender that you have insurance that protects against fire. This is called hazard insurance.
The payment to the insurance company for this insurance can be included in your mortgage payment every month.
The cost of hazard insurance will vary from company to company. If you already have one or more insurance policies with a company you should have them price your policy. It may be cheaper due to a "multi line" discount. If you have had a renter's policy in place, you may have earned some credits that can be transfered to your first years hazard insurance premium.
Many people interchange the term homeowners insurance with hazard insurace, and both terms typically refer to the same thing.
If you're not sure where to begin looking for insurance, ask your mortgage professional. They see what their clients are paying and may be able to recommend someone who is reasonably priced and easy to work with.
Home Owner's insurance is typically cheaper in suburban areas than in rural areas due to the proximity of fire hydrants and fire departments.
Usually, borrowers will be required to purchase one full year of homeowner's insurance up-front for purchase loans. The paid receipt will need to be faxed to the lender before the loan funds.
Homeowners insurance may be paid by the borrower on their own terms or it may be included in the mortgage payment, however the they prefer.